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Walmart-owned online retailer Flipkart no longer owns a stake in digital payments platform PhonePe as the two companies announced a full ownership separation on Friday.
As part of the deal, existing Flipkart Singapore and PhonePe Singapore shareholders, led by Walmart, have purchased shares directly in PhonePe India. Walmart will remain the majority shareholder of both business groups.
This completes the move to make PhonePe a fully India domiciled company, a process that started earlier this year. PhonePe was acquired by Flipkart in 2016
This comes at a time when the digital payments startup is reportedly in talks to raise around $1 billion at a valuation of $12 billion.
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Setting up these businesses as separate entities will provide value and create new opportunities for investors to participate in the Indian tech ecosystem – helping unlock and maximise enterprise value for shareholders, the two companies said in a statement.
Establishing these businesses as individual entities will allow both to chart their own growth paths, the e-commerce giant says.
PhonePe, one of India's largest digital payments platforms, commands 40% of the market share of the Unified Payments Interface (UPI) network. UPI operator National Payments Corporation of India (NPCI) recently extended the deadline for third-party apps to comply with its 30% market share cap guidelines by two years. NPCI said the new deadline would be December 31, 2024, from January 1, 2023, earlier.
PhonePe claims it has over 400 million registered users, more than one in four Indians are now using the app.
"Flipkart and PhonePe are proud, homegrown Indian brands with a user base upwards of 400 million each. We are looking forward to the next phase of our growth as we invest in new businesses – like insurance, wealth management and lending, while also enabling the next wave of growth for UPI payments in India. This will help propel our vision to provide billions of Indians with financial inclusion," says Sameer Nigam, founder and chief executive officer at PhonePe.
Since its launch, PhonePe claims it has digitised more than 35 million offline merchants spread across Tier 2, 3, 4 cities and beyond, covering 99% of pin codes in the country.
"The Flipkart Group has developed many successful entrepreneurs and seen impactful businesses started by former employees. We are proud to see PhonePe grow and thrive as a successful organization in its own right. We are confident PhonePe will continue to scale and achieve its vision of providing financial inclusion to millions of Indians. Flipkart stays committed to its purpose to empower every Indian’s dream by delivering value through innovation in technology and commerce while helping small businesses connect to pan-India markets," says Kalyan Krishnamurthy, CEO of Flipkart Group.
India's homegrown e-commerce marketplace Flipkart runs several businesses such as fashion retailer Myntra and online ticket booking platform Cleartrip.
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